Fixed-Rate vs. Adjustable-Rate Mortgages: Which is Right for You?

Choosing the right mortgage is one of the biggest financial decisions you'll make when buying a home. The two most common loan types are Fixed-Rate Mortgages (FRM) and Adjustable-Rate Mortgages (ARM)—but which one is best for you? Let’s break them down so you can make the smartest choice.

🏡 What is a Fixed-Rate Mortgage?

A Fixed-Rate Mortgage (FRM) has an interest rate that stays the same for the entire loan term (typically 15, 20, or 30 years).

✅ Pros of Fixed-Rate Mortgages:

✔ Predictable monthly payments – No surprises, your rate never changes.
✔ Great for long-term buyers – Ideal if you plan to stay in your home for many years.
✔ Protection from rate increases – Even if market rates go up, yours stays locked in.

❌ Cons of Fixed-Rate Mortgages:

❌ Typically higher interest rates than ARMs at the start.
❌ Harder to refinance if rates drop unless you qualify.

📌 Best for: Buyers who want stability and plan to stay in their home long-term.

🔄 What is an Adjustable-Rate Mortgage (ARM)?

An Adjustable-Rate Mortgage (ARM) has an interest rate that starts low for an initial period (e.g., 5, 7, or 10 years) and then adjusts annually based on market conditions.

✅ Pros of Adjustable-Rate Mortgages:

✔ Lower initial interest rate – Often lower than fixed-rate loans.
✔ Good for short-term buyers – Ideal if you plan to sell or refinance before the rate adjusts.
✔ Can save money upfront – Lower monthly payments in the first few years.

❌ Cons of Adjustable-Rate Mortgages:

❌ Rate can increase – Your payments may go up after the fixed period ends.
❌ Uncertainty – Hard to predict long-term costs if rates rise significantly.

📌 Best for: Buyers who plan to sell or refinance before the fixed period ends.

📊 Fixed-Rate vs. Adjustable-Rate Mortgage: Quick Comparison

FeatureFixed-Rate Mortgage (FRM)Adjustable-Rate Mortgage (ARM)Interest RateStays the sameStarts low, adjusts laterMonthly PaymentPredictableCan increase over timeBest ForLong-term buyersShort-term buyersRisk LevelLowMedium to HighMarket SensitivityNot affectedAffected by market changes

🤔 Which Mortgage is Right for You?

✅ Choose a Fixed-Rate Mortgage if:

• You want stable monthly payments.

• You plan to stay in your home for 10+ years.

• You prefer long-term security over potential savings.

✅ Choose an Adjustable-Rate Mortgage if:

• You plan to sell or refinance within 5-7 years.

• You want lower initial payments and can handle possible future increases.

• You’re comfortable taking some risk with your rate.

🏡 Get Expert Mortgage Guidance

Still unsure? Verified Mortgage can help! Our team will analyze your financial situation and goals to find the best mortgage option for you.

📞 Call us at 317-650-8547
📩 Apply for a mortgage today: www.verifiedmortgage.com